Growers in the main US hard red winter wheat-growing region,
whose crop prospects have been tested by drought and frost, suffered the extra blow
of seeing their farmland market viewed as the country's weakest.

Returns from the average US farmland investment slowed to 2.4%
quarter-on-quarter for the first three months of the year, well below the 5.4%
in the January-to-March period of 2013, according to the National Council of
Real Estate Investment Fiduciaries (Ncreif).

The decline reflected a drop to 1.53% in land price
appreciation and a 0.88% income return.

And it reduced to 17.4%, from 20.9%, the figure for growth
in returns on a full-year basis, the weakest figure since early 2012.

Southern Plains woes

Growth was particularly weak in the southern Plains, where
the full-year return on farmland investment fell to 7.9%, down from 12.0% for
calendar 2013, and "the lowest total return" of any region.

Farmland prices fell marginally during the first three
months of 2014, Ncreif said.

The area's performance comes amid revived concerns over a
lack of rainfall in much of the region, with 79% of Oklahoma rated in drought,
and 99% of Kansas, the top wheat-growing state.

The dryness, combined with a harsh winter and late frosts,
has hurt the condition of winter crops too, with 32% of Kansas winter wheat,
and 61% of the Oklahoma crop, viewed in "poor" or "very poor" condition in
official reports on Monday.

And although there are rains in the forecast, Oklahoma State
University small grains specialist Jeff Edwards said that "the drought has
severely limited resilience in our crop and we are entering late April, so I do
not anticipate there will be much of a recovery or rebound in fields that were
severely damaged" by frost.

Top performer

The Pacific West was the best performing region, with
returns of 31% year on year, despite the lack of rain in California, all but
0.2% of which is rated officially in drought.

This return was "more than double the next closest region",
the South East, with Mountain states and the Pacific North West close behind,
with returns of 11-13% over the year.

Overall, the one-year total return, at 17.4%, "remains
strong", said Christopher Jay, chairman of the Ncreif farmland committee and
director of financial analysis with Prudential Agricultural Investments.